Assume that the term structure is flat with a 20% rate. At the end of one year there is the possibility of a single, parallel shift in interest rates either to 24% or to 16% or rates could stay the same. Assume annual compounding. Suppose you have a two- year holding period. Under the three interest rate scenarios, what would be the future value of your investment at the end of two years for the following bond investments if you reinvest the coupon payments at the then-prevailing market rate?
A $1000, 2-year bond with a 20% coupon payment.
b. A $1000, 5-year bond with a 20% coupon payment (i. e., you sell the bond after two years).
c. A 2-year zero coupon bond with a face value of $1,440.
Answers: 1
Other questions on the subject: Business
Business, 22.06.2019 20:30, Picklehead1166
Data for hermann corporation are shown below: per unit percent of sales selling price $ 125 100 % variable expenses 80 64 contribution margin $ 45 36 % fixed expenses are $85,000 per month and the company is selling 2,700 units per month. required: 1-a. how much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000 and monthly sales increase by $20,000? 1-b. should the advertising budget be increased?
Answers: 1
Business, 22.06.2019 21:00, atkinsonsinbraz
At present, the united states has an embargo against north korea because a. the two countries have extremely poor political relations. b. north korea will not adopt a capitalist government. c. north korean products are too difficult to use. d. north korea has an embargo on american products. e. products from north korea are in higher demand than american-made products.
Answers: 2
You know the right answer?
Assume that the term structure is flat with a 20% rate. At the end of one year there is the possibil...
Questions in other subjects:
History, 07.04.2020 23:37
Mathematics, 07.04.2020 23:37
